Industry observers say CEO’s exit leaves Opel’s future hanging

Article by Anita Panait, on July 17, 2012

With the eventual exit of Karl-Friedrich Stracke as chief executive of the financially beleaguered Opel, observers in the auto industry are now left wondering whether that would mean and lead to the eminent departure of the European unit of U.S.-based automaker General Motors.

The movements and the action in the past four weeks had been tell-tale signs that Opel might be able to make through in the near future and eventually put an end to its losing streak, as the GM unit has been swimming in $3.5 billion in losses due to weakening European car market and inflated fixed cost base.

Opel’s management and labour unions had approved a mid-term business plan and had agreed to terminate operations at a German factory in 2017 as the basis for restructuring negotiations, according to Autonews.

Due to these good signs, even analysts at Morgan Stanley analysts drew their focus away from Opel’s problems to Ford’s European issues. Despite words from company sources that Stracke’s removal changes a little of the sistuation, Opel’s future has become more unclear than ever. Although GM and Opel said that the reason for Stracke’s removal was for him to take on special assignments at the US carmaker, many believe that it was not the real one.

An industry observer quipped that GM chief executive Dan Akerson was heeding the advice of ex-GE boss and management guru Jack Welch, who had remarked if a company didn't measure up, the only options were to "fix it, sell it, or close it'." Out of the three options, Akerson is now trying to fix Opel. He had tried to sell the loss-making unit, but had failed to do so.

If the fix option does not work, Akerson could as well be bound to shut down Opel, according to Ferdinand Dudenhoeffer, a professor at the Centre Automotive Research (CAR) in Duisburg, Germany. Armin Schild, a regional chief of the IG Metall union that negotiates for Opel's blue-collar workers, and a supervisory board member at the carmaker, has warned that more is at stake in future negotiations than just swapping job guarantees for wage concessions.

Topics: opel

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